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If the report’s predictions come true,
Britain could be left dependent on an unreliable undersea cable line
with France for its emergency energy supply.

Audrey Gallacher, Director of Energy at Consumer Focus, said
of the report:

WINTER WARNING

Household
fuel bills could soar this winter, with firms set to increase profits
from each home by almost 50 per cent, from £45 to £65.

SSE will raise the price of a typical dual fuel bill nine per cent from mid-October, from £1,172 to £1,274 a year.

That rise will affect as many as 5million households.

And British Gas has told 10million households that their bills could go up by as much as £100 next year.

Earlier this month Scottish Power and First Utility also pulled their cheapest fixed rate deals.

The
removal of these tariffs has left consumers with a dwindling range of
options that offer both the peace of mind of a fixed price coupled with
no exit penalties.

Experts have warned the average annual energy bill could rise by £118 to a record £1,428 next year.

'While there is enough generation capacity to mean that
widespread power-cuts are still unlikely, narrower margins mean the risks of
outages are higher and scarcity of energy could also feed into possible price
rises in future.

Today's report reveals the UK could be left with a shortage
equivalent to 1,000 households in 2015/16, or 9,000 households in extreme
circumstances.

It estimates the chance of network operator National Grid
having to cut power to customers would stand at one in 12 in 2015/16.

But National Grid would cut power to businesses and
industrial customers before households, which significantly reduces the risk of
families being left in the dark, according to Ofgem.

It also has contingency plans in place to avoid interrupting
supply to customers, by asking power stations to maximise generation and also
by importing more power from Europe.

The Government is also looking at plans to pay gas-fired stations
to ensure they are on stand-by to generate enough demand whenever required to
boost the spare capacity.

Didcot power station: The station will close in 2013, further reducing the UK's power independence

The report warned that there ‘will be a
significant reduction in electricity supplies from coal and oil plants
over the period, primarily driven by closures required by European
environmental legislation’.

The most damaging piece of EU ‘green
tape’, industry insiders say, is a 2001 measure designed to limit
emissions for older power stations. The Large Combustion Plant Directive
forces all coal or oil-fired power plants built before 1987 to install
expensive emissions-reducing equipment or face closure by 2015.

It was spawned out of the Brussels
obsession with weaning all European countries off coal power. But
because of Britain’s rich mining heritage, it is a measure that hits the
UK harder than any other EU member. Nine of the UK’s coal and
oil-fired power stations are destined to shut by 2015. This represents
about 15 per cent of the UK’s total generating capacity. This would
leave Britain dependent on imported gas – which comes with a notoriously
volatile price tag.

Dark future: Ofgem warned that due to the new EU rules closing power stations Britain may have to face 1970s blackouts by 2015

The Government welcomed today's report and said it hoped
reforms as part of its forthcoming Energy Bill would ensure supply was secured.

Edward Davey, State for Energy and Climate Change Secretary,
said: ‘Security of electricity supply is of critical importance to the health
of the economy and the smooth functioning of our daily lives.

'That is why the Government is reforming the electricity
market to deliver secure, clean and affordable electricity.'

Mike Clancy, general secretary designate at union Prospect,
said: 'This report highlights how imperative it is for the Government to act
now and introduce electricity market reform that ensures the programme of new
nuclear build and other vital energy infrastructure projects, such as carbon
capture and storage, are attractive enough to secure the long-term investment
they require.'

But Greenpeace policy director Doug Parr said the report
'sends out a clear warning that we need to reduce demand' rather than build new
power stations.

ANALYSIS by ALEX BRUMMER

The
stark warning that the lights in Britain could go out within three
years, as a result of the country’s mad dash towards a greener energy
policy, is a terrible indictment of the prevarication and zigzags of
government policy on energy.

Warnings
that Britain’s energy supplies were on a knife-edge were frequent
during Labour’s 13 years in office, but it was not until the dying
months of Gordon Brown’s administration that Downing Street finally
committed to new nuclear.

And
while the dithering went on, the European Union continually tightened
environmental standards, further undermining Britain’s energy security.

The
coal-fired power station at Drax, North Yorkshire, will have to come
off line, but plans to replace it with biomass or cleaner coal have
failed to come to fruition and new nuclear is still on the drawing
board.

As for
wind-power and coastal energy turbines, so favoured by the Coalition
when it came to office, the generous subsidies are being removed making
it a much less attractive investment for the big six energy companies.

Meanwhile,
so far the Coalition has failed to come up with a pricing policy that
makes development of a new generation of nuclear power stations
sufficiently attractive to the foreign investors on whom the UK is
relying.

Now, Energy
Secretary Ed Davey’s new ‘dash for gas’ is expected to be at the centre
of the Energy Bill due before the Commons shortly.

But
experts point out that some of the UK’s mothballed gas power stations
could take years to come back on line and new capacity will take upwards
of four years to build.

Most worrying of all, by placing so much emphasis on gas Britain exposes itself to the vicissitudes of the global energy market.

British-owned
Centrica has taken a number of steps to secure gas supplies through the
Norwegian Langeled gas pipeline and by securing long-term liquid
natural gas contracts with Qatar – a Middle East ally with some of the
largest natural gas reserves in the world.

But
as the UK has found in the past, when Russia closed off gas pipelines
through Ukraine, power supplies are at the mercy of events beyond our
control.

Unlike other
trading nations, such as Holland, the UK has failed to build sufficient
storage capacity to see us through a prolonged geo-political crisis.

The
most positive thing that can be said of the warning from Ofgem is that
it may finally galvanise Whitehall and a fractured government into
action.

Big global power
companies such as Electricite de France, which owns British Energy’s
nuclear stations, will have to be offered a firm promise of a generous
base price if new nuclear is finally to go ahead.

But
it could be at least a decade before that power comes on stream. If
the interim solution is more gas, consumers will once again find
themselves at the mercy of market prices.

In
recent times wholesale gas prices have started to come down because of
new American extraction techniques known as ‘fracking’. This has made
the US almost self-sufficient.

That
ought to make gas supplies more plentiful. But relying on imported
energy, at a time when the Middle East is in flames, can hardly be
regarded as looking after the nation’s economic or national security.